2023 (5) TMI 963 - HC - Income Tax

Re-assessment u/s 148 Invalidated Due to Change of Opinion and Improper Authority in Tax Case.

M/s. DHANSRI ROLLER FLOUR MILLS Versus THE UNION OF INDIA AND 3 ORS., THE COMMISSIONER OF INCOME TAX, THE ADDL. COMMISSIONER OF INCOME TAX, THE INCOME TAX OFFICER

M/s. DHANSRI ROLLER FLOUR MILLS Versus THE UNION OF INDIA AND 3 ORS., THE COMMISSIONER OF INCOME TAX, THE ADDL. COMMISSIONER OF INCOME TAX, THE INCOME TAX ... Issues Involved:1. Validity of re-assessment proceedings under Section 148 of the Income Tax Act, 1961.2. Limitation period for issuing notice under Section 148.3. Authority for granting satisfaction for re-assessment under Section 151.Summary:1. Validity of Re-assessment Proceedings:The petitioner challenged the re-assessment proceedings initiated by the Income Tax Officer, Ward-I, Tinsukia under Section 148 of the Income Tax Act, 1961. The original assessment for the assessment year 2014-15 was completed under Section 143(3) allowing the deduction under Section 80-IC. The Court observed that the re-assessment was based on a change of opinion, as the Income Tax Officer had already scrutinized and accepted the deduction during the original assessment. The Court held that 'if subsequent to assessment made under Section 143(3) of the Income Tax Act, 1961, the assessing officer draws an inference that assessment made by him was erroneous, such a change in opinion would not justify action for re-opening assessment.'2. Limitation Period:The petitioner argued that the notice dated 01.01.2019 was barred by limitation. The Court referred to Section 149(1)(b) of the Income Tax Act, 1961, which allows for a notice to be issued within six years if the escaped income is likely to amount to one lakh rupees or more. Since the income allegedly escaped was Rs.47,15,369/-, the notice was issued within the permissible period, and thus, the Court decided this point against the petitioner.3. Authority for Granting Satisfaction:The petitioner contended that the notice under Section 148 was issued after obtaining satisfaction from the Additional Commissioner of Income Tax, not the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as required under Section 151(1). The Court held that 'the Income Tax Officer, Ward-I, Tinsukia had obtained satisfaction of Additional Commissioner of Income Tax, an authority who is not covered by the provision of Section 151(1) of the Income Tax Act, 1961,' making the re-assessment proceedings not in accordance with law.Conclusion:The Court found the re-assessment proceedings vitiated on two counts: the change of opinion and the improper authority granting satisfaction. Consequently, the impugned notice dated 01.01.2019 and the subsequent letter dated 20.05.2019 were set aside and quashed. The writ petition was allowed, and the interim order dated 13.06.2019 was merged with the final order. No costs were awarded.